{ "episodeId": "SLP165", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "rafael_yakobi": { "name": "Rafael Yakobi", "role": "guest", "tag": "RAFAEL" } }, "segments": [ { "speaker": "stephan", "time": "00:10", "start": 9.79, "text": "Hi and welcome to the Stephan Livera podcast, a show about Bitcoin and Austrian economics. Today for episode one hundred and sixty-five, my guest is Rafael Yakobi. This show is brought to you by Kraken, one of the world's leading Bitcoin exchanges. You've gotta sign up with them, go to kraken dot com. They've got a high quality platform, they offer high trading volume and really low fees, with no minimum or- Hidden fees. They offer twenty four seven support and they've got a chat on the website so you can quickly get your questions answered if you need them. Kraken are consistently rated the best from a security standpoint and they often get excellent feedback from users also. 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So Rafael Yakobi from The Crypto Lawyers joins me today to talk about some of the key financial surveillance legislation and regulations, and we talk about how that impacts on Bitcoin companies today, as well as some of these practices. practices such as flagging of coinjoin users and also the use of Bitcoin surveillance companies and techniques, and also we talk about taint and also the distinction between custodial mixing versus non-custodial mixing. Here's the interview. Rafael, welcome" }, { "speaker": "rafael_yakobi", "time": "03:47", "start": 227.11, "text": "to the show. Thank you, thank you, Stefan. Appreciate you having me." }, { "speaker": "stephan", "time": "03:50", "start": 230.17, "text": "So Rafael, just before we get into all, all the stuff, maybe just tell us a little bit about yourself, what you're doing currently and how you got into all this Bitcoin stuff. Sure. So I'm" }, { "speaker": "rafael_yakobi", "time": "04:01", "start": 240.98, "text": "a lawyer in California, and I've got a law practice that's focused on crypto. Obviously, a large part of that, I would say a large majority of that, involves Bitcoin, but, you know, crypto is the broader category, and obviously there's a lot of different terminology that people use to talk about Bitcoin and crypto, right? Each-- in, in the US at least, each government agency You know, use its own terminology, right? The SEC will say digital assets and, you know, FinCEN will say convertible virtual currency and other, other agencies, you know, call things differently. So crypto seems to be the most, most common term among them, even if it doesn't exactly fit my personal, I would say, ideological position, 'cause I do consider myself, you know, a Bitcoiner first and, and, and a lawyer second for whatever that's worth. But in terms of, you know, what I do, a, a lot of- A lot of it relates to Bitcoin on ramps and that, you know, involves dealing with money transmitter laws and the Bank Secrecy Act, but I also deal with other regulatory work, you know, including securities laws and Dealing with the SEC, representing people that have, you know, are being investigated by the SEC or prosecuted, prosecuted by the SEC. So, you know, a, a little bit of everything that That comes up in the crypto world, you know, outside of tax and things like that, which I leave to the people that are more interested in that, at least from a practicing perspective. Of course. One, one quick disclaimer that I make, and I guess, you know, this is just a thing that lawyers say, but- You know, I'm gonna be talking about broad concepts and hopefully I'll get things right. I may get things wrong, but in any event, not legal advice. And I would also say that I don't consider myself an academic, an intellectual, or a historian, and so, you know, I consider myself a practitioner who's really concerned with The reality of what's happening on the ground, you know, as opposed to, I don't know, very big picture ideological concepts. So, yeah, I would say to, for, for putting my, you know, Experiences and opinions in context, that, that would be a relevant note." }, { "speaker": "stephan", "time": "06:20", "start": 379.68, "text": "Sure, great. Yeah, yeah, thank you for that. And, yeah, so I, I was interested to talk with you because I saw you recently co-wrote an article on Bitcoin Magazine alongside Sasha Hotta, and also, I know you're, interested in some of the Bitcoin privacy techniques and as well, and using things like Samurai Wallet, which is, as listeners know, is my favorite Bitcoin wallet. So maybe we'll just start with a little bit around what's the- High level, what are some of the key pieces of legislation or pieces of the law that apply when it comes to Bitcoin use? Sure. Well," }, { "speaker": "rafael_yakobi", "time": "06:55", "start": 415.18, "text": "you know, as far as individual users go, fortunately there aren't that many regulations that apply to people who just want to, you know, buy and sell and use Bitcoin for its normal purposes, whether that's, you know, using it to transact on the internet or, or holding it as a store of value or whatever else you might want to use it for, you know? Other than really tax implications, but for normal people, there's not that much that you need to do or, or really anything. I mean, I hesitant-- I'm hesitant to make, you know, definitive statements about the law because i-- in the US, there are, there are so many laws and regulations that Nobody knows how many there are. Nobody knows the total, at least as far as I understand it, for the research I've done, because I'll have clients call me and ask me, \"Well, I just wanna make sure I'm following all the laws, right?\" And so there's like literally hundreds of thousands of laws. So the answer is probably that nobody can follow all the laws because there's too many. But, as far as Bitcoin goes, there are I guess two sets of laws that are most relevant, and, you know, there's the state and federal level, right? So the federal government, you know, covers all of the states, and then each state's-- each state has the ability to regulate certain kinds of activities on its own. And so at the federal level, the most important one is probably the Bank Secrecy Act, right? And the Bank Secrecy Act, I did a little, you know, background research on it, and it's not- It's not actually, the name of the law isn't actually the Bank Secrecy Act, it's the Currency and Foreign Transactions Reporting Act of 1970. But in 1974, there was a Supreme Court case where Its constitutionality was challenged by the ACLU and, the interestingly, the Bankers Association of California and also individual depositors who challenged the constitutionality of the Bank Secrecy Act, which requires that banks collect lots of information, keep records of it, report certain kinds of transactions to the government. And so the way it got its name is the Bank Secrecy Act is that one of the Supreme Court justices referred to it as the so-called Bank Secrecy Act. And I don't actually know why they called it that. I, I'm sure there's some, you know, something happened somewhere in the legislative process or at a hearing or something like that, but now we just call it the Bank Secrecy Act, even though that's not the real name. but yeah, at the federal level, it's the BSA, which regulates primarily financial institutions. And so, you know, well Fin- FinCEN is the government agency that oversees businesses that are regulated by the BSA, among others, and their goal is to prevent money laundering. As opposed to the states, you know, they have a different set of regulations that potentially apply to Bitcoin transactions and exchanges, and those are typically referred to as money transmitter laws. So the states are focused on consumer protection, whereas the federal government is focused on preventing money laundering. I mean, there's a lot more details to it than that, but that's like the big picture." }, { "speaker": "stephan", "time": "10:07", "start": 607.08, "text": "Yeah, sure, sure. And, I guess the other big one is OFAC and sanctions, right? So, what's that?" }, { "speaker": "rafael_yakobi", "time": "10:13", "start": 613.43, "text": "Right. So, so, OFAC is a, I, I can't remember if it's a division or a bureau of the, Department of Treasury, I believe, that deals with international sanctions and, you know, spec-- specially designated, persons who the government has decided that you cannot do business with essentially. And so, you know, as this relates to the BSA and, and, and financial institutions, you know, the government has certain affirmative obligations that are placed upon these businesses that they need to, you know, search every customer or search every transaction to make sure that through the government database to make sure that they aren't dealing with, you know, let's say coun-- countries or individuals that are on the list. that being said, you know, there's a lot about OFAC that isn't clear even to most lawyers that I talk to you know, or to me, or most regular people, in terms of how does it apply to, you know, normal people? Because regular people are still not supposed to, you know, deal with people who are on the sanctions list and- I don't know what, what obligations we're supposed to have. I mean, in terms of, are we supposed to screen all of our business counterparts, you know, through the government list to make sure that they're an approved person to deal with? That sounds kind of horrifying and Orwellian. But As far as I understand the law, if you, if you, if you do deal with somebody who's, you know, on that list who's not, you're, you're not supposed to work with, there's like very severe penalties, and I'm pretty sure it's a strict liability statute. So that means that you don't have to intentionally violate the law, you just, if you do it, like, like speeding in the car. I don't know how it is in, Australia or anywhere else, but in the US, if you speed, you get a ticket. You don It doesn't have to be willful, you know, that's what we consider strict liability. So the, the, the OFAC issue is, is an important one, and it's something that I'm, I think I'm planning to research and write an article about, 'cause I've asked a lot of lawyers, and everyone knows generally that, you know, financial institutions need to screen for these things, but the obligations on individuals isn't clear, at least to me. you know, do you need to like, if, if you're a vendor who sells sandwiches, do you need to Get somebody's name and, and, and screen them to make sure they're not, you know, on the bad list, right? That, that seems like a strange way to operate, but if the law is written that way that anyone can, you know, go to prison for violating it, then that's something that people need to know about." }, { "speaker": "stephan", "time": "12:53", "start": 773.37, "text": "Right, and the other complicating factor is that there are multiple sanctions regimes. So if you are an international business, now you're dealing with not just US sanctions, but there's EU and other countries who have their own terrorist lists and whatever else that they say you're not allowed to, you know, transact with these people. And I guess hypothetically, if, if somebody is a Bitcoin user and they wanted to buy something from someone in, say, Iran, right? That's probably an example where you have to be careful there. From that perspective. Now, I think bringing it to the Bitcoin perspective as well. So many of us, many of us Bitcoiners and, you know, listening to this podcast, we interact with Bitcoin businesses, and many, though not all of those Bitcoin businesses Are subject to the KYC and AML laws, right? Or the Bank Secrecy Act here in Australia, I think it's actually called the Anti Money Laundering Act, but nevertheless, this places certain obligations on those businesses to do various things, right? And, and I think the main one you were referring to there was that idea of collection and verification of identity information, right? And then they've got to now screen that person's name against various lists, right? Like these terrorists lists and so on, the sanctions OFAC lists and so on, and then it also requires screening of their transactions, and I guess that's in like the traditional banking environment, you, they would have to screen, the, the transaction, description so can you tell us a little bit about how, you know, that interaction works there between the Bitcoin companies and then BSA and sanctions laws and other relevant, you know, financial surveillance laws or whatever you wanna call them? Sure, sure. So," }, { "speaker": "rafael_yakobi", "time": "14:44", "start": 884.11, "text": "a-a-at a high level, and, you know, I try, I try to lay this out in, in the article, but although I've, like, you know, deal with these things on a regular basis, I understand that for most people, it seems, seems foreign and unclear. And honestly, there are nuances to it that haven't been solved and potential conflicts in the law where the law seems like it requires something, but You know, there's been no case and no court to decide what exactly is required under what cir- what circumstances. But, you know, qualifications aside, generally the BSA requires that you take Reasonable steps to prevent money laundering. And, and when I say reasonable, I don't mean that as a value judgment to say that, you know, I think it's reasonable. I'm saying that that's the legal standard. And I, and I-- the reason why I mention that is 'cause I've talked to people about it, and I repeat this to them, and they say, \"Well, I don't think it's reasonable at all.\" Right, but I'm not saying that it's great. I'm not a fan actually. but so as a general principle, you know, you have to have procedures in place reasonably designed to prevent money laundering, you know, and I'm paraphrasing here, but basically based on the risks of your business. And so that's the legal obligation, but what that means in practice is a matter of industry standards and What each business decides to do and, you know, what the government decides they, they think might be appropriate or not appropriate. there are some bright line requirements, you know, at certain- Thresh-thresholds, for example, if you-- in the US, if you deal with ten thousand dollars in cash or more, you're gonna have to file a currency transaction report. Right? Or maybe it's above ten thousand, ten thousand or more, something like that. Anyway, you have to file a certain report which requires that you have certain information about the customer, right? And so that's a clear rule that either you can follow it or not follow it. But in general reasonable steps to prevent money laundering. And so now we're in this position with Bitcoin, where we've got, you know, all these financial institutions popping up that want to sell Bitcoin or, you know, allow people to help facilitate people trading it, and the industry has to decide How they're going to follow this spirit of the law in terms of taking reasonable measures. And how to do that is up for dispute. Obviously, you know, I expect we'll talk about it. There's blockchain analysis companies that would like You know, would like to make themselves essential for purposes of following the law, and I think that they've made a lot of progress in doing that. You know, it seems like all the major exchanges use them, and, you know, they're inserting themselves in there, and if they can do that well enough, then that, that's probably going to be the standard, 'cause I think it's, it's a matter of industry standards in terms of what will be, you know, What will be relevant when this is eventually tested in court? Because at some point, the government is going to go after somebody to say, \"You know, your procedures weren't reasonably designed to prevent money laundering,\" and then somebody, a court or jur-- you know, judge/jury has to figure out whether they were reasonable or not. And then, you know, eventually there'll be case law about it, and there'll be standards that evolve from that based on the technology. So there's a lot of it that's up in the air at the moment. And, you know, that's why part of the reason why I was interested in writing this piece with Sasha's, because Well, in particular about CoinJoin, in that I, I, I, I'd like to, if I can, encourage people who run financial institutions, like, like exchanges, to Reconsider what it is they think they have to do, and to question the people that have a financial interest in, you know, selling them potentially privacy invading services." }, { "speaker": "stephan", "time": "18:44", "start": 1124.21, "text": "Sure, yeah. And so typically, a bank or a financial institution that, you know, is subject to these laws, they would, when they take on a new customer, they collect and verify the information, they would check it against various government databases. they might check the name of the person, if they are a political-- there's a thing called politically exposed person, so they might check on that basis. And there, there's this, there's this whole raft of requirements, and, as I understand as well, based on the product products that they offer, they would do some kind of what's called a financial crime risk assessment, and they would based, say, based on this type of product, whether it's, say, it's a credit card or it's a, you know, international, whether it's an account that you can send international money payments from, they would assess the risk of that, and then based on that, they have to kind of blend all of that together into, okay Huh, now am I also layering on the various monitoring things, like transaction monitoring and so on? And it's kind of like, that's all, that part of that world, that KYC world, which, again, I'm not saying I'm a fan of that, obviously, I, I think it's, you know, quite wrong, but again, we have to know our enemy. so- A-again, bringing it back to the Bitcoin aspect of it, I guess the question here is around how far do these companies have to go in terms of assessing the risk of a hypothetical new customer? Are they required to try and use some of these privacy-invading Bitcoin blockchain analysis techniques to try and understand what was the source of that money, because there are arguably some kind of parallels within some of this financial- Regulation stuff that talks about, okay, what's the source of your funds? Who's the beneficial owner? That kind of, those kinds of languages, well, that kind of language is used, so Maybe we could just talk a little bit about what those blockchain analysis companies are doing. So could you just outline a bit around that?" }, { "speaker": "rafael_yakobi", "time": "20:43", "start": 1242.97, "text": "Sure. Well, I, I did get to listen to the, you know, the interview from yesterday with, John Levin, I believe, from Chainalysis, and, you know, It, it was informative, but I wouldn't say that I'm an expert on exactly what they do, and I don't know that they're transparent about what they do, and I don't know that we know definitively how effective they are at what they do, or whether the results that they provide to their clients are reliable, right? And there's a lot of people that are much better at, you know, assessing the technical validity of their- Their operations than I am. but generally they will work with exchanges to analyze the blockchain to assign, to assign certain activities Certain labels to activities that are going on on the blockchain and, you know, come up with risk, risk scores or flags or, you know, something that they can bring to the exchange's attention so that the exchange, if the government ever, you know, audits them and their AML policies, for example, they can say, \"Look, we're doing things.\" Right? And I, I, I don't know if this is-- maybe it's not a good analogy, but I'll, but I'll, I'll make it anyway. So I think that in Soviet Russia, there was, some kind of saying where they said like, \"You know, we pretend to work and they pretend to pay us.\" And I'm not saying that that's exactly like that here, but a lot of this is just like everyone has to- Do something so that they can show that they're doing something, so that they can show that they're not breaking the law, because the law says you gotta do something. And, you know, I don't know I don't know how-- I, I don't know the motivations of the exchanges themselves, particularly the big ones that employ these, you know, if they're really on board for these causes or if they consider it a necessary evil, it probably varies from exchange to exchange. I bet there are some that seem to have a more pri-- you know, pro-privacy Perspective like Kraken versus others, maybe like Coinbase that may not be as interested in privacy and, you know, also blacklist. You know, controversial persons from their platform and, and, and things like that. but so in, in general, the, the, you know, the blockchain analysis companies are, are, are, are giving flags and giving a history of the, of the activity of the money, let's say before the Bitcoin, for example, because they can't really analyze the dollar blockchain, as far as I know." }, { "speaker": "rafael_yakobi", "time": "23:24", "start": 1404.34, "text": "You know, they're giving a history of the money, and, and I, I struggle to see how valuable that really is. I mean, just from a practical perspective. Let's say I deposit some Bitcoin into an exchange and they realize that like sixty five hops ago my Bitcoin was on Mount Gox and like maybe somebody stole it from Mount Gox. What are they supposed to do with that information? You know, I don't know. And then, and then twenty five hops later, you know, it was on b t c e, and, you know, b t c e got in trouble because, you know, they didn't follow US regulations about KYC or AML, right? And so- Users are, seem to be expected to give up the privacy of the entire history of their money, theoretically since it was created or released, you know, via the block reward or Coinbase transaction, and that's a lot of Privacy compromising information for seemingly questionable probative value in terms of preventing crime. You know, but that being said, we don't, we don't know without being able to, like, you know, get to use these kinds of tools ourselves and see what they can see, you know? We, we, we can't really tell. So it's, it's certainly, there's some kind of a balancing act here, because, you know, just in listening to, to, Levin from, from Chainalysis, you know I thought he used a lot of political loaded moral language, right? Where, you know, let's say Peter Macormack would say, \"Well, what about the privacy?\" And he would say, \"Well, what about, North Korea?\" As if the choice is either privacy or North Korea and, you know, nuclear, nuclear programs or something like that. and so" }, { "speaker": "rafael_yakobi", "time": "25:19", "start": 1518.97, "text": "I, I don't know how, I, I, I don't have that much of a response to, you know? Loaded political language, as I, as I would call it. I think it's-- I, I consider that kind of stuff to be a false dichotomy. I mean, I really wanna hear what you have to say about this, 'cause this is a, you know, recent development, and I haven't really heard too much commentary on it yet, so I'm curious to hear your perspective. but I feel like it- There's a lot of things that could theoretically be done to prevent crime, but they would be terrible, right? I mean, or, or, or to achieve any particular, you know, goal that the government might be interested in. For example, the government might be interested in the public health, and so maybe it would be a net positive for the public health if they required you to get out of bed at nine o'clock in the morning and go outside and jog and do jumping jacks, and we could just get everyone out of the, get, you know, get everyone out of the house and get them" }, { "speaker": "stephan", "time": "26:10", "start": 1570.44, "text": "Right, like have fat camps, right? And say, \"Hey, you're putting people at risk by, you know, being diabetic or whatever, and we're gonna put you into a fat camp, right?\" And like, would that be, you know, and that's the political philosophy question of, \"Is it right to force this onto people?\" So that, I guess, that's, that's probably a, a, a bit of a example that's More out, out there. But let's say coming back to the chain analysis idea of, oh, well, privacy versus, you know, North Korea and missiles and, you know, the so-called, you know, pedophiles are gonna use Bitcoin or whatever. I think it just has to come down to all bitcoins should be treated as though they are Fungible, because that's the only way like money could really work, right? Now, I guess the counter back from would, would some people would say, \"Oh, well, look, I can trace certain things back, and I know that certain things were done with it, and that...\" Is kind of, it kind of gets into how confident are you about that link? And I guess there's something to it about if that link was less hops ago or less transactions bef- back in the chain, that it might be more clear that, you know, for example, let's say your coins came straight from the Mt. Gox hacked coins. I don't know, like what, what's the, because I mean, not just the law, but like kind of the moral and ethical question of how, you know, how should, should we treat that as? you know, for example, if I were to buy a piece of gold from you, I wouldn't necessarily go to you and say, \"Hey, Rafael, who was the previous owner of that gold? Were they a criminal? Hey, did you ac- is this, you know?\" Right. And, but I, I, I know, again, I'm not a lawyer, I don't know the specifics, but I know there are certain laws in different countries around the proceeds of crime, right? Like, or like knowingly, you know, buying that," }, { "speaker": "stephan", "time": "28:08", "start": 1688.04, "text": "Against the law, and depending on what country you're in. So I guess maybe i-if they were to try and think of it like, \"Oh, those bitcoins were the proceeds of a crime,\" yeah, I guess that's a more complicated question, and I, I wouldn't have the answer on that. but let's, let's bring it back to this chain analysis idea and the heuristics, right? Because they are relying on certain heuristics, right? They're not really proven, they're not really like a hundred percent, you know, for sure," }, { "speaker": "stephan", "time": "28:38", "start": 1717.63, "text": "What is the-- I don't know if you've, looked into any cases on this, but are there any examples where that kind of thing is used and held up as evidence, or is it more like that's a string for an investigator or a detective to pull on and find other leads or other pieces of information or other, collect other evidence?" }, { "speaker": "rafael_yakobi", "time": "28:59", "start": 1739.37, "text": "Right, right. Well, as far as what it means for it to be evidence, I mean, I think it could be evidence of something, you know? How, how persuasive or probative or valuable it is, you know, it, it, it would be circum, circumstantial evidence, right? a-and so I think, like you said, it depends on Well, how, how many hops, for example, are there between, you know, what you-- where, where it started, for example, a-and, and where it ended, and what is the significance of those places? And I guess, you know, an example might be If you withdraw from a major, you know, a, a, a major exchange and you send, you withdraw the Bitcoin from your exchange account to An address that is controlled by the Taliban, right? That seems like pretty strong evidence, you know? But then if there's like five hops in between, it's less, it's, you know, it's, it's not as strong. And this isn't, you know, you don't need to be a lawyer to, to figure this out. It's just a matter of common sense. I mean, after all, if you're going to be tried and there's going to be a jury that's going to decide if you're convicted, then what matters to them is the only thing that matters" }, { "speaker": "rafael_yakobi", "time": "30:16", "start": 1815.59, "text": "The judge that this shouldn't be evidence, although I'm sure there'll be lots and lots of debate about that, you know, eventually as these cases develop. But, you know, eventually you're going to need to convince the jury that the government has proved their case, for example, beyond a reasonable doubt, if it's a criminal case. And I think what, what, what will happen, if it hasn't already happened, and it's possible that it has, but we're- There's going to be evidentiary hearings where this kind of evidence is used, and it's basically going to be a battle of the experts. And so I don't know who will be Who will be qualified as an expert for this kind of thing? I'm sure there are some people, but it's going to be a battle of the experts, and maybe, you know, as a threshold matter for, probably for the judge to decide, okay, is this credible enough that it even meets the threshold that it's admissible? And then, you know, if so Then it'll be a matter of having the experts convince the jury that it's, you know, persuasive, right? That it's good evidence of anything. but we're still ver-in the, in, in the early stages of that, and like our common law system, and I think you guys have one there too, it takes a long time to develop, right? Somebody has to pay, probably a ridiculous amount of money to, you know, go through the entire trial process of defending themselves and go to the court of appeals and maybe even get to the Supreme Court on these important issues, and well, who wants to do that? Not everyone wants to bet their company or their life on, you know, Solving a problem that is good for all of us." }, { "speaker": "stephan", "time": "31:56", "start": 1915.51, "text": "I see. and as I understand, I think Schulze Probst has mentioned a few cases, in the, Netherlands, I believe he's from, where this sort of thing has happened. And there are, there are a couple cases here and there. but it was also funny you were saying that they could, bring in an expert, I'm just laughing 'cause I was just thinking, they're gonna haul in Ergo and get him to, talk Funny thing, one funny thing with some of this is, so bringing it back to, say, in the case where there was a scammer and those coins were then, you know, tried to-- the scammer tried to use the Wasabi wallet, to mix the coins and The funny thing is that there were customers who got their deposits or withdrawals, or had their account in general flagged by the exchange, right? So presumably what's going on here is that exchange has some compliance team or some AML compliance staff, and they're looking, they're using this, you know, chain surveillance tool, such as Chainalysis or CipherTrace or one of these, and they are then flagging that customer and saying, \"Okay, this guy looks like he's high risk because those coins have...\" Of proximity with Wasabi or with Mt Gox or unknown hack coins, right? But the irony is that some of these exchanges might- Unknowingly be used as a form of custodial mixer, because people might just deposit coins in and withdraw them out and effectively, quote unquote, wash them through the exchange. Now, hypothetically It might be that the financial laws are, are there to stop them from doing that, right? Like it should be like, you're the exchange, you should be knowing what's going on, and you shouldn't be allowed, allowing people to use your service as a custodial mixer. But do you have any reflections on, that, what I was just talking about there?" }, { "speaker": "rafael_yakobi", "time": "33:54", "start": 2033.69, "text": "Well, I mean, as far as exchanges flagging CoinJoin, I know it's a, it's a sensitive topic for a lot of people, myself included, because we all, we all, you know, Have a way that most of us want this to go, right? We don't want them to, to, to treat CoinJoin as suspicious activity, you know? but as far as, as far as I know, you know, there haven't been that many reports of it actually happening, but at some point soon, each exchange is probably going to decide, you know, either officially and publicize it or off the record, decide how they're going to, how they're gonna treat CoinJoin. And I would say that The position that I'm hoping that they'll go for is that if they don't have any reason to believe that anything suspicious is happening besides the fact that, you know, they could tell that the transaction resulted from a coinjoin, that That shouldn't be, that should, by itself, that shouldn't be enough to treat the transaction as suspicious. You know, that, that, that's what I'd like to go for, because that means that if there's- If the government wants to prosecute crimes, then they can just do, police work and detective work, right? Without having to do dragnet surveillance like they probably do on everything else. Like, is it-- Do they not have enough? You know? They can probably listen to everything that everyone says near their phone, and they can read everyone's emails, almost everyone's emails, right? And all your Facebook messages and your Twitter messages, and there's just an unbelievable amount of data available to the government already, I think. And, you know, to the extent that we can maintain a tiny little piece of financial privacy, I think that would be a good thing. and I, and I don't think it I don't think it materially impairs, you know, law enforcement's ability to, to prosecute actual crimes. I mean, it just seems like the, the cost is just not worth the, the benefit that they That they believe that they're getting from this. So I'd say that's my, that's my initial reaction." }, { "speaker": "stephan", "time": "36:05", "start": 2165.41, "text": "Right, yeah, and I, I, I think I would agree that exchange users shouldn't be flagged merely for using CoinJoin, basically. now it may be the case that, that some chain surveillance companies are doing that practice, or, and... I guess there's a lot of things that are unclear here because it could be that the tool is flagging, \"Yes, this could have come from a coinjoin,\" and then actually the compliance staff at each exchange is the one making the final call of whether I flag this customer or I lock their account or I, send them a letter and say, \"Hey, we saw you deposited this money to X, Y, Z address and we don't like that,\" blah, blah, blah. But I think it, to me, maybe this is an imprecise analogy, and I know it's not technically precise, but it, it might be sort of like saying, \"Oh, hey, you customer, you're not allowed to use a VPN when you come to my website.\" And it's sort of like, you might want to, you might have legitimate reasons for wanting to mask your internet traffic from corporate surveillance, and that's why you use a VPN, or you might use Tor. Would it be, like, imagine if you- You went to a website and they said, \"No, why were you using a VPN? Explain to me why you were using a VPN. Are you trying to hide something?\" Right." }, { "speaker": "rafael_yakobi", "time": "37:26", "start": 2246.29, "text": "Right. I, I, I think it's a good analogy. and- Well, hopefully the government doesn't figure that out and, you know, start getting involved there too, although, you know, they already do to some extent, right? If you-- if you're an American and you go to bitmex.com, that's exactly what they say, or, you know, they, they have a big red thing saying you're not allowed to be here, right? And then if you use a VPN Even if you use a VPN, if they-- they'll, they'll kick some people off even who are using VPNs, you know, because they suspect that you might be American for some other reason. I, I don't know what other data they collect. Maybe they, you know, get some unique token from your browser, from a cookie or something like that. I'm not a, I'm not a software developer, so you might know better than me. But I, I think it's a good analogy and," }, { "speaker": "rafael_yakobi", "time": "38:19", "start": 2298.67, "text": "I, I, I would say the blockchain analysis, CoinJoin situation is, it's more severe than that, right? That, that wouldn't be That would be an inconvenience and probably has bad implications, but the full analogy would be, well, if you wanna access our website, first of all, you can't use a VPN because that's suspicious, and also, you just need to share your browsing history with us. Right? Yeah. We need to know, if your IP is gonna come to our website, then where was your IP before? Was it somewhere suspicious? Right? So it's not just that they wanna know that you- You know, really control-- I think an analogy to what you're saying with the VPN would be, you know, the exchange saying, \"You need to sign a transaction from your Bitcoin wallet that made this deposit, right? So you can prove it's really you.\" So that we, so we know you're not just using your account here at the exchange to, like, you know, accept money from someone else for purposes of laundering it, right? We wanna know it's really yours. But they're not just asking for that, that wouldn't be that bad. what they're asking for is The entire history, right? If you're not coin joining, it seems like, you know, and, and, and I'm not an ex- I'm not an expert on the technical aspect of it, but If you're, if, if somebody hasn't coin joined the Bitcoin that you're using when you deposit, then those hops can go back many, many years and many, many hundreds of times, and so it's, Well, too much, way too much data that people should, should be concerned about it. I mean, yeah. So I think it's a big concern." }, { "speaker": "stephan", "time": "40:02", "start": 2402.08, "text": "Yeah, and the other point that might be worthwhile making here is that it's almost like they're expecting you to remain defenseless against any other person trying to understand what your, how many bitcoins you have, for example, because if they were to go down this pathway of flagging any coinjoin use at all, then it help-- then that basically stops people from protecting themselves against other threats, right? It's saying you must remain defenseless, and every time you transact with somebody, you're not allowed to use any coinjoin, then, then you effectively might end up doxing your stash or your prior transactions or your salary to your counterparty, and then, like, the non-exchange just normally you doing a transaction with somebody in the Bitcoin world. So, it, it, it's like, it's like forcing you to remain in this state of defenselessness so that the exchange compliance department can satisfy the regulator. The KYC/AML regulator. Right." }, { "speaker": "rafael_yakobi", "time": "41:05", "start": 2464.52, "text": "Yeah, I, I, I agree. Those are obviously, you know, important con-security concerns for everyone that uses Bitcoin, you know, not wanting to share all this information with everyone that you interact with. And another thing is, is that some exchanges-- and we don't know how this is gonna play out, there's some game theory here, but some exchanges want to implement CoinJoin as-- by default when they, you know, when a, when a user goes to Withdraw from an exchange, I think that-- I think Bull Bitcoin already does that, Coinjoin by default, and other exchanges that I've spoken to are considering this. And the question that they are faced with is, let's say they, they, they want to, you know, get some pro privacy points for their brand, and they wanna implement Coinjoin by default when you withdraw from their exchange. The real, you know, the main reason why they're doing this is to protect themselves, right? So that the user doesn't know how much money they have and at what addresses, right? So they can maintain privacy from their users and, you know, maintain the security of their exchange since they're going to be a custodian of some kind. But the risk there is that if they do this, are they screwing their customers down the line? Right? You buy Bitcoin from an exchange and then you take it off there so you can put it in your cold storage, and then they do coinjoin on the way out, and then when you try to deposit it later somewhere else, that exchange flags you. Right? That exchange flags you as, you know, a, a coinjoin person. And I, and, and it's not clear to me at this point, you know, I think you, you had talked with, Corey Clipston about the in-intransigent minority. Minority, yep. Did I get that right, the first word? Yep. Alright. You know, that, that Nasim Taleb talks about, and I think that, that's how it's gonna work with CoinJoin. Is who can, who can fight back better? You know, if a lot of people use CoinJoin, the exchanges have no choice but to accept it, I think, 'cause if it's a majority of the participants, you can't blacklist fifty percent of your customers, you know? But if not enough people use it and the exchanges, you know, quickly take an affirmative stance against CoinJoin Then other exchanges will be in a difficult position where even if they want to, you know, if you get Bitcoin from Kraken and you're not allowed to sell it at Coinbase, that's not good. You know, customers are gonna complain about that, and, you know, new customers aren't gonna understand this. And so I, I think it can go either way. I mean, I, I don't know, I wanna know what you think about this, you know, 'cause a lot of this stuff that we're talking about isn't, isn't a matter of legal expertise, and I think you probably know more about it than I do." }, { "speaker": "stephan", "time": "43:51", "start": 2631.02, "text": "Yeah, so for me, my perspective on that is there will be naturally a compet-competition between the exchanges, and I think most exchanges, they're not-- they're probably taking the approach of, \"I need to do the minimum to get past the regulations so that I can maximize my customers and maximize my revenue, right?\" And so it's, I think it's kind of like most exchanges begrudgingly have been pushed into this. That, at least that's my My guess, my speculation, I don't know for sure. I think it's probably the case that many-- It's becoming, it's sort of, I view this like it's becoming this little cottage industry of blockchain analysis, right? And they wanna try to-- Well, it's like that saying, you fake it 'til you make it, right? Like if you just keep putting it out there and keep trying to say that you're required, and, oh, look, all these other people are using something like this, right? And in that, Jonathan Levin episode, he said Something like chain analysis, you need to be using something like this to assess the risk of your customers, blah, blah, blah, right? And so they're trying to make it a thing. And fundamentally, it, I think there are a lot of reasons why you can poke holes in that theory, as we were saying, right, the VPN analogy, the forcing you to remain defenseless point, and also around what is considered a privacy technique to begin with. Like another quick example would be, if you look at some of those chain surveil- Balance company public reporting that they put up, sometimes it's actually just address reuse that gets people, right? So like the criminal was doing address reuse, which is a well-known bad privacy practice. Now, nowadays, basically any Bitcoin wallet that you use nowadays doesn't do address reuse, like generally they have what's known as HD wallets, hierarchical deterministic wallets. Now, would it be considered a privacy technique to not- reuse addresses? Surely not. I mean, that's just like the, the Bitcoin best practice. And so that is also an interesting practice because then it's like, well, are they gonna flag people for doing address reuse?" }, { "speaker": "rafael_yakobi", "time": "46:01", "start": 2760.93, "text": "Right. I, I agree, and, you know, I've thought about this particular issue of address reuse because I think it's not a stretch of an analogy or, or a metaphor maybe to say that You know, take the, the, the similarity between, you know, using new addresses each time you receive Bitcoin and, and CoinJoin is that you're taking affirmative steps, you're, you're doing something in order to maintain your privacy. And they really don't seem that different to me. I mean, in principle You're doing something, and you're doing it for this same purpose and same reason. And so, you know, it's really just a, it's a matter of Almost, I, I don't know if \"cultural\" is the right word, but it's like everyone has been conditioned to accept that you can use new addresses and there's nothing weird about that. Right? But CoinJoin has to deal with this branding problem, you could say, or marketing problem maybe, that, you know, it gets associated with custodial mixers or tumblers, and those get associated with, you know, All the bad things that the, the Baptists in the bootleggers and Baptists, analogy are trying to prevent. That's-- and, and, and the, the reference I'm making there is to some commentary that Guy Swan, gave. He, he was nice enough to read my-- the article that we've been talking about and- Everyone should go listen to that. he gives some commentary, after, after his reading of the article, and he mentions this concept of the bootleggers and the baptists, which you might already be familiar with, but, how there's this kind of unholy alliance between, you know- The preachers in the government who want to prevent all the bad things and, you know, the, the industries that profit from, from this War on the alleged bad things. so I think, I think that's something that also comes into play here, as far as the compliance companies go." }, { "speaker": "stephan", "time": "48:18", "start": 2897.61, "text": "another interesting point as well is to consider from the so-called taint, you know, quote unquote taint point of view. There aren't that very-- there aren't really any ways that it makes sense, and I think here we have to shout out for sixty-one-o-two Bitcoin Only. sixty-one-o-two did a bunch of graphs and charts, and he was pointing out that it's quite nonsensical to have this conception of taint, because effectively every coin eventually becomes tainted at some point, and then it's a question of how many hops back and so on. Did you have any thoughts to share on that and how, and perhaps how that influenced your article? Or any of your work. Right," }, { "speaker": "rafael_yakobi", "time": "48:58", "start": 2938.14, "text": "well, I agree with the shoutout. He's got those great infographics and, you know, some of, some of it regarding proximity and the reliability of the heuristics is a little bit above my technical abilities, but I think a lot of it is very informative. In terms of the, let's see, I'm, I'm sorry, can you repeat the question again?" }, { "speaker": "stephan", "time": "49:23", "start": 2963.43, "text": "Oh, I was just saying, did that, did that inform any of- Of your article and this concept that if we were to try and run with this idea that, you know, hypothetically, let's say taint existed, it might be the case that over time every coin becomes tainted, and then it's just like, \"Well, that's not really gonna help anyone if every coin is tainted.\"" }, { "speaker": "rafael_yakobi", "time": "49:43", "start": 2982.83, "text": "Yeah, yeah. I, I, I think the, the concept of taint is conceptually flawed and, you know, not, not pragmatic for money, but the, you know, the concept is something that's used by the government, right? And it's not The government's goal to make sure that Bitcoin is money. You know, so for their perspective, they call it tainted, and then, you know, I guess all the coins are tainted, and then I guess that's, that's bad, and maybe they wanna ban it or restrict its use or, you know, make you do even more due diligence to prove that you're not a criminal, right? To prove your innocence, or something like that. So, you know, from their perspective, this is all great for them. Or, you know, I guess them being, let's say, a government that is disproving of Bitcoin, or, or a particular agency that thinks that, that Bitcoin is getting in the way of, you know- Whatever it is that they're trying to do. So I, I certainly agree, I, I certainly agree with that idea, and I think one, one minor thing I wanted to go back to from, from the chainalysis interview with Levin Was his point that I think from his view, that be-- doing chain analysis, or, you know, doing what his company does Helps the adoption of Bitcoin because it allows, you know, financial institutions to, to deal with Bitcoin and then people get access. And I, I think Well, there's a tiny bit of truth to that, that maybe, you know, if, if a company works with Chainalysis, then they're more likely to get a bank account. I guess I have a, maybe a more cynical theory that- Blockchain analysis companies, let's say, exert their influence or buy their influence with, with banks and legislators to make themselves a requirement, right? So they create the conditions by which they become necessary so they can solve a problem that they created. And I, and I think that at the, at the highest levels for the big exchanges, this is pretty much what happened, right? You, you have, you know, a large exchange that wants to- Get a bank account at a big bank, and then, you know, compliance company comes along and makes very good friends with the bank, and then the bank will tell the, the exchange, \"Okay, if you wanna keep your bank account here, then you need to use blockchain analysis.\" Right? And then, you know, you just m-m mush in some hand waving about the law and anti-money laundering, and now you, you get to where we are now, where, where, you know, people will say that chain analysis is required by law. You know what I mean? So, yeah, I just wanted to go back to that," }, { "speaker": "stephan", "time": "52:32", "start": 3152.05, "text": "just popped into my head now. No, fantastic. I, I, I think, I think you're spot on there. I think that basically is what's happening is that there are these chain analysis compliance companies that stand to gain from these big government contracts and, I can't remember the exact number, but I think Chainalysis actually do have some, federal government contract for, you know, millions of dollars, right? And so there, there is money in this, and there's money in them selling that vision, even if that vision isn't Necessarily accurate. Right." }, { "speaker": "rafael_yakobi", "time": "53:06", "start": 3186.24, "text": "That would, that would be, that would be best case scenario if it's not accurate. I mean, I guess maybe not best case scenario. Best case scenario is we just, you know, let people use Bitcoin unrestricted. But, one good scenario would be that Blockchain analysis is ends up being useless, maybe because lots of people coinjoin and then the exchanges waste some money hiring these companies and pretend to do surveillance, but the surveillance doesn't actually work. Right? Going back to the, you know, we pretend to work and they pretend to pay us. Yeah, exactly. You know, I mean, there'll still be economic costs that will, that will be passed to consumers because of this. You know, and maybe I don't know, if, if, if it raises the price, you know, the price of fees on an exchange by five percent, but it doesn't actually change anything, you could just call it a tax, right? Except in this scenario, the tax isn't going directly to the government, it's just going to some companies that have, you know, bought the requisite power from the government so that they can make themselves require, you know, required. Right. Yeah." }, { "speaker": "stephan", "time": "54:12", "start": 3252.03, "text": "And it's just sort of like how, big companies try to be the ones who set the new regulatory framework, which in turn- Puts a regulatory cocoon around them and protects them from newcomers and upstarts because they, because they can more easily deal with the compliance cost of having an army of lawyers and accountants and IT people to help deal with those new regulations." }, { "speaker": "rafael_yakobi", "time": "54:37", "start": 3276.85, "text": "Right. To, to add to that, about, about the big companies doing that, that has definitely happened in the Bitcoin world, right? There are big exchanges like Coinbase, for example, that, you know, seem to take the approach very early on That if you wanted to operate a Bitcoin exchange, you needed to get a money transmitter license in, in each state or almost every single state, right? And so they went out and got all these very expensive state licenses that are separate, separate from the, you know, the Bank Secrecy Act and FinCEN and all that. They went and got all these very, very expensive licenses to kind of set the industry standard Before anyone really, you know, figured out whether these licenses were required, so now they kind of pushed the industry in the direction where, well, if you wanna compete with a big exchange like them, then you need to get these licenses too, right? And then when they get to the bank, you know, they get, you know, their, their account at the big bank, and now if you wanna get the account, you need to have the level of compliance that they have, right? And so the result of this is that Consumers suffer because of the lack of competition, and they also suffer because their privacy suffers as a result of just the particular kind of, I don't know if you could call it regulatory capture, but the particular kind of, you know, capture this has happened, that has happened. So I think it's worth people remembering that it's not, it's not just the government. I mean, big companies Have a fiduciary duty to, you know, make as much money as possible under the circumstances that they're operating in, and that's exactly what they're gonna do, even if that isn't necessarily what is best for you. and a quick point about, l-last point about this big versus small companies, for example. You know, we had talked about the Bank Secrecy Act and risk-based, you know, procedures to prevent money laundering. Those, the expectations on smaller businesses are much, much lower than they are in bigger businesses. And I think that, that's something that Bitcoiners can potentially, you know, use to their advantage, right? Obviously, somebody who runs one Bitcoin ATM, I don't think that they can be reasonably expected to hire Chainalysis or some expensive company like that to do, you know, how many compliance people do they need to hire? Right? They might have one person running the business. Are you- Supposed to have a compliance team of ten people to, you know, for a one man business, right? So, you know, although there's a lot of negative things about these financial surveillance laws, I would say that There's also a, a silver lining that if Bitcoiners care with their dollars or their satoshi about privacy, then, you know, start, start small businesses, and maybe you can help-- I don't know, I, I don't wanna say even the playing field, but help, contribute to a better Better market for Bitcoin." }, { "speaker": "stephan", "time": "57:33", "start": 3453.22, "text": "Yeah, that's a really interesting point. I hadn't considered that before. one other topic I'm keen to get your opinions on is this question of custodial versus non-custodial mixing. Now, the article you wrote was also in relation to, Was it Ed Harman, Larry Harman, sorry, Larry Harman of, the company, one of the guys behind Dropbit. And so as I understand, Harman was operating Helix, which was a, like, a centralized or custodial mixer. Are you able to shed some light for us on if there's any legal difference, or in the eyes of the law, is it different if you are using a non-custodial service, such as Samurai Whirlpool?" }, { "speaker": "rafael_yakobi", "time": "58:17", "start": 3496.95, "text": "Right. Yes, very big difference. So essentially, to, to be what's considered a money transmitter under, under federal law, you need to, you know, accept and transmit You know, currency or funds or value that substitutes for currency, right? So the, the FinCEN's definition for what makes a money transmitter and therefore somebody that must register and follow the BSA and do all this stuff is somebody that is taking control of, you know, another person's funds and, you know, either exchanging it or sending it to another person on their behalf, right? Like Western Union might be a typical example in the traditional world of a money transmitter, and that's what these laws were created to, originally created to regulate, and- And so if you're using a custodial service like a Tumbler, then, you know, i-if the person that's running the Tumbler is, is accepting Control over your Bitcoin and then sending it somewhere else, then they're a money transmitter, therefore they need to register as a money services business and comply with the Bank Secrecy Act, right? Which requires the risk-based approach and means they have to appoint a chief compliance officer and make suspicious activity reports, currency transaction reports, right? There's all these things they have to do. But, you know, if you, if you're not taking control of other people's funds, then you're not a money transmitter and you don't have to do that. So Fortunately, as it is now, at least in my opinion, and maybe, maybe there's other people, other lawyers who disagree, but as it is now, non-custodial wallets, even if they, you know, allow the coordination of coinjoin through the wallet, aren't money transmitters, don't have to register with FinCEN and don't have to do KYC or AML, which is great, right? And it's great not just because, you know, good for privacy, but it's great because not your keys, not your coins, right? And That's like, well, probably, at least to me, really one of the most important principles in Bitcoin, and just from my own experience as attorney, you know, I know that the people we talk to are mostly sophisticated to some level or another, you know, about, about Bitcoin or, or, or crypto and custody and things like this. You know, you have really high level people on your podcast, but I get calls, I don't know, five or six or seven times a week from people that lose a lot of money Money because they send their Bitcoin to like strangers on the internet, like all the time. Just an unbelievable amount of people who lose just crazy amounts of money because they send their Bitcoin to people on the internet. And so might not apply to, you know, to us so much, but I, I try to tell them that if there's one rule you can follow, it's not your keys, not your coins, right? That solves like- I don't know how you get scammed. If you can follow that rule." }, { "speaker": "stephan", "time": "01:01:05", "start": 3665.21, "text": "Yeah. So in that case, well, again, don't, obviously, don't dox anything about those individuals, but were those individuals thinking they were buying a product online and they were paying for it or like why did they even send the money?" }, { "speaker": "rafael_yakobi", "time": "01:01:17", "start": 3677.0, "text": "Oh, all for- Alleged investment opportunities. It's just greed, it's just greed, unfortunately. You know, there'll be websites that look kind of official, except that you'll never find anyone's name on it, or some of them will have, you know, fake names, and they all, you know, will say things like promising a percentage return in a short amount of time," }, { "speaker": "rafael_yakobi", "time": "01:01:38", "start": 3698.31, "text": "although In one, in one instance, I mean, you know, we've all seen like, there's like thousands of scams out there that are promising, you know, double your money, send me Ethereum or Bitcoin and I'll send it back and double it or whatever, you know, they're-- It's like, it's like noise that we blend out now because it's so obvious, you know? But maybe for some people, I don't know, boomers or something, it's not obvious to them, and so they're more often the victims. And, you know, there's definitely an overlap" }, { "speaker": "rafael_yakobi", "time": "01:02:09", "start": 3729.71, "text": "A lot of people that, you know, will call me that use Coinbase, for example, are maybe the same ones that are new users or don't know what they're doing, you know, they'll get into these issues where they have all their Bitcoin on their exchange, you know, and they'll, they'll give somebody their 2FA or give somebody their login information, i-i-it's a major issue. But, yeah, most of them are trying to invest in things on the internet. You know, basically Ponzi pyramid or other kinds of investment schemes. Though there's one guy that had called me that Fell for this and invested a bunch of money in some kind of a scam, and then they-- and then it actually worked. And it was totally-- it's definitely a scam, but for some reason they actually sent him back like a ton of Bitcoin. Like, I don't know, I don't remember the numbers exactly, so I'm just gonna make them up. But let's say he sent like five or ten Bitcoin and like got back like thirty-five Bitcoin. Right? And then called me and he was like, \"Oh, what do you think I should do? How should I pay taxes?\" And I'm like, \"Dude, you, you just got the miracle of a lifetime happen to you, right? Because ninety-nine point nine percent of people that this happens to, your money is gone forever from the second that you send it.\"" }, { "speaker": "stephan", "time": "01:03:21", "start": 3801.12, "text": "You know," }, { "speaker": "rafael_yakobi", "time": "01:03:21", "start": 3801.96, "text": "yeah. So," }, { "speaker": "stephan", "time": "01:03:22", "start": 3802.97, "text": "I don't know, just- It could be that maybe it was like a Ponzi, and he was one of the early people, and they had to make a payout to make it look legit to everyone else, and I don't know, he was like one of the lucky point o o one percent of people. I don't know, I'm, I'm speculating, right? Yeah. yeah, that's a pretty crazy thing there. But I, I guess anyway, the broader lesson is non-custodial mixing is, superior from a- Having to do work, regulatory, you know, in a regulatory and legal sense, if you're just staying non-custodial, that, generally is better for people. So I think that's something, that's a good takeaway for people when, they're thinking about how they're operating in this Bitcoin world. Rafael, did you have any other tips for" }, { "speaker": "rafael_yakobi", "time": "01:04:07", "start": 3847.87, "text": "listeners? Well, I did just go on a rant about not your keys, not your coins. So, so I think that's the main one. I'm gonna re-reinforce that one. I mean, I, I try to send, you know, when those people email me or call me with those You know, unfortunate stories, I'll try to direct them to places where they can, you know, I don't know, report the crime or try to help educate them a little bit. But one video that I'll always send them is like this very short, fifteen-second clip of Andreas Antonopoulos repeating, \"Not your keys, not your Bitcoin. Your keys, your Bitcoin. Not your keys, not your Bitcoin.\" Right? And he just keeps repeating that for like fifteen or twenty seconds, and, you know, to try that, try to drill that into their heads. so- I think I'm gonna reendorse my \"Not Your Keys, Not Your Coins\" advice, and, and just in terms of safety. and so obviously that's at least an implicit endorsement of non-custodial services like some of the ones that you had mentioned. Sure." }, { "speaker": "stephan", "time": "01:05:06", "start": 3906.97, "text": "okay, so Rafael, if listeners want to find you online, they wanna follow your work, where can they find you?" }, { "speaker": "rafael_yakobi", "time": "01:05:13", "start": 3913.27, "text": "Sure, so I've got a website for my firm called thecrypto-lawyers dot com and- If you Google \"crypto lawyer\", generally I do pretty good on Google. So, depending on where you are, I, you know, I try to be-- Well, I've gotten lucky that Google has just blessed me by putting me at the top, or close to the top, for \"crypto lawyer\". So if you Google that, hopefully you should be able to find me. But I'm also on, on Twitter at ca, like California, ca_crypto_lawyer. And, you know, I, I think some of your-- I, I probably know a bunch of your listeners already. I try" }, { "speaker": "rafael_yakobi", "time": "01:05:49", "start": 3949.76, "text": "So, you know, I'm just a regular guy who also happens to be a lawyer and working in this, in this area. So I certainly, you know, be happy to connect with anyone, particularly anyone that, well, I guess this is my five second chance to shill. Anyone who wants to start a Bitcoin ATM business or a crypto exchange or is dealing with these issues and wants to talk to a lawyer about it, happy to help anyone like that." }, { "speaker": "stephan", "time": "01:06:11", "start": 3971.77, "text": "Fantastic. Well, yeah, definitely listeners go and, hit Rafael up. And Rafael, thank you for joining me. Yeah, thank you very much. So I hope you enjoyed that. I had a couple points that unfortunately I would have liked to bring up, but I didn't feel I had the time to, or they came up afterwards. So consider, Chris Belcher has made some contributions onto the Bitcoin Wiki, surveillance company, section, and he's listed a couple of points that you should also consider, such as jurisdictions. What happens when different jurisdictions differ on their definition of who is a terrorist? Or what if, say, the Chinese government wanted to use this kind of chain surveillance product, and then they wanted to mandate that certain users are blacklisted or high-risk flagged or whatever? Also consider that there's not necessarily an oversight or appeal on what happens with this chain surveillance company sort of thing. I mean, it, it kind of happens behind a black box, and the user has no way of really knowing what's happening in there or appealing that process. Also consider that the use of these products may someday have an incentive to block protocol upgrades. So, for example, let's say we get the Schnorr Taproot software coming in either later this year or early next year, and then a couple years down the line, we have cross-input signature. Aggregation proposed as a soft fork. There may at that point be some incentive to block that because it might make CoinJoin cheaper and therefore obsolete the business model, if you will. So I will include a link in the show notes to that page, and I'll also include some links to the sixty-one-zero-two infographics on CoinJoin and, Bitcoin Taint and so on. They're well worth a look. Ultimately, a lot of this stuff arguably has a root cause within FATF and AML and sanctions regulation to begin with. And of course, there'll always be some companies that try to step into that and try to exploit that. Now, maybe the best response really is just to make them obsolete. It's just to normalize CoinJoin and associated techniques so that they are seen as a benign standard practice. So I'll leave you with that. Thanks, and I'll see you in the citadels." } ] }